Bruce Lunsford:After 24 years of Mitch McConnell, isnt it time for change?
Senate passed $700 billion Wall Street bailout bill. The Senate on Wednesday upped pressure on the House to pass a $700 billion rescue for Wall Street by strongly approving a plan that supporters said would avert a potential economic disaster. [USA Today, Senate OKs $700B bailout, 10/1/08]
Enquirer: $700 billion might be only the beginning; area economists predict price tag as high as $1.5 trillion. Washingtons $700 billion bailout deal might stem the carnage in financial markets, but local experts disagree if its enough to contain the growing credit crisis. Finance experts and economists say some injection of cash into the market is necessary to keep banks lending to businesses and to each other and to stabilize a weak economy Michael Ferguson, a finance professor at the University of Cincinnati, said Sunday night that authorizing the Treasury Department to purchase troubled assets could be enough to revive the markets. He said just buying some securities might be enough - that act alone could prop up the market value of mortgage-backed debt. They may not have to use the whole amount, he said Steve Wyatt, chairman of the finance department at Miami University, expressed concern federal officials were moving too slowly with too little funding. He thinks authorization to purchase $1.5 trillion of toxic assets wouldnt be excessive. Congress may be called back to do still another bailout in the coming weeks or months, he predicted. [Enquirer, $700B might be only the beginning, 9/29/08]
Herald-Leader: McConnell received $4.3 million from Wall Street. McConnell, the Senate Minority Leader, is a beneficiary this last 20 years of more than $4.3 million in donations from the financial sector, according to the Center for Responsive Politics, a non-partisan watchdog group. [Herald-Leader, 9/25/08]
McConnell voted for the Gramm-Leach-Bliley Act, which removed Depression-era regulations on the financial industry. According to the Washington Post, the Gramm-Leach-Bliley Act aimed to make the countrys financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companiesthe legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments. David Hawpe from the Courier-Journal wrote that McConnell voted to deregulate Wall Street banking and investments. [S. 900, Vote 354, 11/4/99; Washington Post, 9/17/08; Courier-Journal, 9/28/08]
McConnell approved deregulating credit default swaps. McConnell supported the Commodity Futures Modernization Act, which banned regulation of credit default swaps, an insurance-like product bought by financial services companies to cover their risky subprime mortgage investments. American International Group, rescued by the Federal Reserve is one of the biggest sellers of these swaps. [H.R. 4577, Voice Vote, 12/15/00; Politico, 9/20/08]
Associated Press: CEO pay skyrocketing despite economic crisis. As the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year, an Associated Press analysis shows. The AP review of compensation for the heads of companies in the Standard & Poors 500 index finds the median pay package added up to nearly $8.4 million. Thats a gain of about $280,000 from 2006. The 3.5% pay increase for CEOs came even as the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food. [Associated Press, 6/20/08]
Financial industry CEO salaries from 2005-2007, according to USA Today:
• Countrywide CEO: $362 million in salary, bonuses, stock-option gains and perks ranging from country club fees to personal use of corporate aircraft.
• AIG CEO: $25.4 million, including $322,000 for private use of corporate aircraft, $153,000 for car and parking, $160,000 for home security and $41,000 for financial planning.
• Former Lehman CEO: $187 million.
• Merrill Lynch CEO: $66 million, including $357,000 for car services and personal use of aircraft in 2007.
• Citigroup CEO: $42 million, including $180,000 for corporate aircraft, ground transportation and security services.
• Goldman Sachs CEO: $76.2 million, including $233,000 for car and driver services and $61,000 for financial and benefits counseling services. [USA Today, 9/28/08]
Associated Press: Bush Administration proposed radical bailout plan with a jaw-dropping price tag at taxpayers expense. The Bush administration laid out a radical bailout plan with a jaw-dropping price tag -- a takeover of a half-trillion dollars or more in worthless mortgages and other bad debt held by tottering institutions. [Associated Press, 9/20/08]
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